Lawsuit Filed by CA Family Over Allegedly Deceptive Insurance Policy Removed to Federal Court

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A proposed class action filed in October 2017 against a group of insurance companies has recently been removed from state to federal court in California.

Filed by a husband and wife and their two minor children, the suit alleges the family bought a property in California and engaged defendant Universal 1^st Insurance Services to assist them in purchasing insurance for their home. They claim they clearly explained their living situation and indicated that “sometimes all or part of the family” would stay with the husband’s mother in Granada Hills. According to the complaint, Universal then filled out an insurance application and checked off a box noting the property as their “primary residence,” as opposed to “secondary residence” or “vacation home.”

In November 2014, the complaint continues, the plaintiffs’ property sustained water damage, and they filed a timely claim with the insurance company defendants – Travelers; Travelers Commercial Insurance Company; Travelers Property Casualty Insurance Company; and The Standard Fire Insurance Company – that were all separately identified in their insurance policy. The companies supposedly denied their claim, arguing that they misrepresented their living situation and the property at issue was not, in fact, their “primary” residence.

The plaintiffs note that the defendants inspected the property after they purchased the insurance policy and before the covered loss occurred and should have been aware that the family “did not live in the property 100% of the time.” The suit argues that the defendants “lay silent hoping to keep Plaintiffs' premium,” but knowing they would be able to deny any insurance claims on the house.

The suit takes further issue with the insurance policy’s language, noting that the document contained contradictory information concerning the statute of limitations for filing a lawsuit. On one page, the plan allegedly indicated that the suit must be filed on the two-year anniversary of the loss, while another page limited the window to one year. The plaintiffs argue that both deadlines contradict California state law, which indicates that the statute of limitations “is tolled or suspended while the claim is pending.”

The complaint continues with allegations that the defendants failed to perform an adequate inspection of the damage as required under the plaintiffs’ policy and subjected them to an "examination under oath,” attempting to intimidate them and force them to hire legal representation “at great expense.”

The plaintiffs claim they were forced to sell their property at a reduced price as a result of the defendants’ deceptive conduct and unlawful provisions in their insurance policy.